(as reported by Standard and Poors and the Wall Street Journal)
Where have home prices been over the years in Portland, OR?
What does the Case-Shiller Index show us about the long-term trend in prices for homes for sale in Oregon's largest metro area?
How do the increases in Portland's score -- recently reported for May through August, 2009 on this important indicator of the home value -- compare to the city's history since the creation of the Index in 1987?
Well, here is the chart:
Remember, the data behind the index began being tabulated in 1987, but has all been calibrated so that a value of 100 on the Index is equal to the level of Portland home prices in January, 2000.
On this chart you can see the ordinary, slow-but-steady historical rate of home price increase continued up until about 2004.
Then the rate of increase went crazy as larger numbers of buyers dramatically bid up the price of homes at an unsustainable rate.
Then the Index for Portland started an abrupt slide in the summer of 2007.
Now the values for May and June, 2009, have turned the graph of the prices for homes for sale in the Portland area again upward.
Will that trend line again show prices increasing at a rapid pace? Or will Portland prices in the near future graph a lot like the long haul from 1987 to 2004?
Only time -- and national fiscal and monetary policies -- will tell.
But I'm not betting against the long-term history.
***********************
Jim Hale
Principal Broker / Owner
Graduate, REALTOR Institute e-PRO
2012 Member, Million Dollar Club of Lane County
2012 Member, Real Estate Brokers Million Dollar Club
actionagents.net
1715 Linnea Avenue
Eugene, OR 97401-1962
Office: 541-484-0219
Direct: 541-543-9991
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Eugene Oregon Homes / Real Estate jim@actionagents.net
All statistical market data is based on information from the RMLS of Oregon for the dates indicated.
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Jim, This a great picture that tells 1000 words. Certain events surrounding the development of real estate on a local level can throw off graphs like this. But fundamentals are what they are. Thanks
The fundamentals are:
The historic increase in home prices is slow and steady as she goes over the long haul.
Prices went up sharply due to government-fanned, highly combustible demand. The fire went out. The line took a dive of Olympic proportion.
Hasten the day we get back to pre-boom rates of increase.
Hi Jim..if we only had a crystal ball :O))
Fred -
If they pass the $8000/$6500 tax credit, we will be having a ball all winter down here in the States.
Jim, too bad the data prior to 1987 is unavailable for Portland. I would have to think, looking at just this graph that it would be time to break out the champagne. Do you have the data for this graph or a source for it?
In markets where data is available over a longer period Case Shiller's method of sampling seems to show that home values did not grow faster than inflation prior to about 1985. We all seem to realize now that there was an oops in 2003 or 2004 when prices exploded upward but I think there is a bigger question. Why did home prices double (adjusted for inflation) between 1987 and 1997 and an additional by an additional 50% from about 1999 and 2009 (again adjusted for inflation). For reference, the longer average shows home prices growing by about 10% from 1890 to 1980, about 100 years.
Overall this means that homes are becoming increasingly unaffordable and I cannot see that trend continuing indefinitely. Do you have any ideas about why the new paradigm (1980+) of home prices continually increasing faster than inflation has happened and how long we can expect that to continue?
Howard -
I do have the published data for the graph which I put in my own excel spreadsheet to produce the graph you see. If you'd like, I will forward the file. My apology for not having the most recent month posted.
As for the further macro-analysis you suggest, that is probably beyond my pay grade.
But I agree: housing is becoming less affordable.
There are lots of variables that will keep economists busy evaluating for generations.
I believe one of the factors inflating home prices in the last few decades is the (still expanding) increased participation of women in the work force....creating demand-pull inflation. More women in, more inflation, even more women in....
But the other, more serious, cause that I suspect is: the simple decline in the strength of our economy and our dollar.
That has lots of causes. But the biggest is de-industrialization. That's just a big word for teaching our kids that working in a factory is beneath their dignity.